BUY – Carnaby Resources (CNB)
This copper and gold explorer has projects in Queensland and Western Australia. Recent drilling at the Greater Duchess copper and gold project delivered encouraging intersects at Mount Hope, confirming high purity and high concentrate along strike that adds to its rapidly emerging scale. This project could be fast tracked given its close proximity to infrastructure.
BUY – ARB Corporation (ARB)
ARB supplies 4-wheel drive accessories to Australian and international markets. In recent years, the company has engaged with the Ford Motor Company to provide accessories to a bigger US growth market. We expect the recently launched earth camper trailer to be popular among its loyal customers. This innovative company is focused on supporting export markets. A strong customer order book supports a brighter outlook.
HOLD – IGO Limited (IGO)
IGO owns and operates nickel mines in Western Australia. IGO also has a stake in the Greenbushes lithium mine via a joint venture. Greenbushes has a long mine life, and offers a high ore reserve grade. Net profit after tax of $412 million for the quarter ending March 31 was up 22 per cent on the previous quarter. Net debt also significantly fell. The share price has been a strong performer since March.
HOLD – CSR Limited (CSR)
CSR makes and distributes building products in Australia and New Zealand. CSR was recently trading on a favourable forward price/earnings ratio compared to the building materials peer group average. The company was recently trading on an annual dividend yield of 6.72 per cent. The shares have been steadily climbing since late May.
SELL – Aurizon Holdings (AZJ)
AZJ operates a rail freight network, transporting coal and bulk commodities. In an update in early May, the company retained EBITDA guidance of between $1.420 billion and $1.470 billion for fiscal year 2023. Heavy rain had impacted the company’s bulk operations in the March quarter, particularly in western New South Wales and the Mount Isa region. In our view, the price/earnings ratio is trading at a premium, so investors may want to consider cashing in some gains.
SELL – Super Retail Group (SUL)
The company’s brands include Supercheap Auto, rebel, BCF and macpac. The group delivered like-for-like sales growth in the first 43 weeks of fiscal year 2023. However, possibly more interest rate increases may slow discretionary spending, presenting challenges for the company to sustain or grow earnings at this stage of the cycle. Investors can consider selling some shares now and possibly buying them cheaper at a later date.